French Kissed in San Francisco

Mayor Gavin Newsom of San Francisco announced that he is sending lay-off notices this week to 15,000 of the 24,000 employees of the City and County of San Francisco. [1] San Francisco like the rest of California’s cities and counties is in the midst of a financial emergency and faces a $522 million budget deficit that must be closed.  This is on top of the $438 million hole in the budget for the current fiscal year that the City filled by using virtually every reserve, piggy bank and accounting gimmick known to man.

This time there is no other way out.

Newsom’s solution is a clever evasion of both the Board of Supervisors and San Francisco’s labor unions.  Instead of arguing about concessions from the unions for a second year in a row and then getting thumped by the Sups, Newsom has taken the offense.  By issuing 60-day lay-off notices to 15,000 employees, Newsom said many could re-apply for their jobs and, if selected, might be offered part-time employment with no one working more than 37.5 hours per week.  After all the paperwork is settled, this action is expected to save the City about $100 million per year and result in the equivalent of a 7% pay cut for employees retained.  Not enough to close the budget gap but it can be done administratively.  Only public safety and muni transit workers were exempt from the layoffs.

The alternative to this approach is to cut about 4000 city positions with all the corresponding impacts on city services and a bloodbath of conflicts before the Board of Supervisors.  The Mayor is betting that the public would rather see fewer cuts in services and let him be the bad guy for cleaning house at City Hall to squeeze out some fat since he is ‘termed out’ and will not be running again for Mayor.

Separately, the San Francisco School Board issued 900 layoff notices including more than 500 teachers, counselors and nurses to balance its own $113 million budget deficit.  Under California law, school districts must issue layoff notices by March15th for the following school year.  The Board is negotiating with the affected unions there for wage concessions and furlough days in an effort to reduce the number of layoffs but this is déjà vu all over again—as the saying goes so the outcome is uncertain. Statewide more than 10,000 California teachers are expected to get layoff notices by March 15th.

Unions for the city hall bargaining units affected were, as you can imagine, not happy.  They accused the Mayor of “French kissing” them after they agreed to concessions to balance this year’s budget.  The reference is to a similar strategy used by the French Government a few years ago to get around its own unions.  In France, the tactic failed since the unions merely made life miserable by work slowdowns and other tactics of their own until the Government relented.

Newsom recently gave up his run for Governor saying he didn’t have the time and could not raise the money for the race.  Of course, his likely opponent in the Democrat primary would have been Attorney General Jerry Brown.  He is now flirting with running for Lt Governor but no one in their right mind can imagine who would want that useless job unless you are worried about Jerry Brown’s health—he is 72 and would have the distinction of being both the youngest person and oldest person elected Governor if he wins in November.  You can bet the labor unions are not going to be writing the Mayor’s campaign any big checks.

So what?

The budget balancing games being played in California are part of the fiscal tragedy of the meltdown of the Golden State.  While every gimmick known to man—like these above in San Francisco may buy a little more time in the hope that the economy will turn around.  But they will not solve the structural problems facing our public finance.  Fixing that requires hard work which, so far, our politicians seem unwilling or unable to do.